Ukraine's pipelines will lose 50% of value when South Stream starts - Naftogaz head

The South Stream gas pipeline, which bypasses Ukraine, may halve the value of Ukraine’s gas transportation system (GTS), according to Andrey Kobolev, head of Ukraine’s national oil and gas company Naftogaz.

After the Russian–led
South Stream project is complete and working at full capacity,
the value of Ukraine’s GTS may fall as much 50 percent from the
present estimate of $25-$35 billion, RIA Novosti quotes the head
of the company.

“We have no wish to lose it, and it’s unreasonable,"
Kobolev said on a Ukrainian local TV channel.

Construction of the South Stream pipeline in Bulgaria and Serbia was suspended following
pressure from the EU to comply with competition law. After a
while construction resumed.

"They [Gazprom] are ready to invest their own
15 billion euro in South Stream construction … This gas pipeline
will take away from the Ukrainian transit potentially up to 60
billion cubic meters. Currently the transit carries 86 billion
cubic meters," Kobolev said.

Previously 110-120 billion cubic meters were fed through Ukraine,
but now the Nord Stream pipeline has taken a share of it, Kobolev
explained, and concluded that once South Stream is operational
Ukraine could be in a very difficult situation.

The Ukrainian GTS needs
an upgrade as soon as possible, Kobolev added.

On July 24 Ukraine’s Parliament rejected the second reading of a
bill that would allow EU and US companies to buy up to 49 percent
of the oil and gas company Naftogaz and co-manage the national
pipelines.

After that Prime Minister Arseniy Yatsenyuk said he was
resigning, but on Monday he said he reversed his decision and
returned to the office. He said that the Rada will reconsider the
bill to outline operators of the GTS involving US and European
investors at the next extraordinary meeting on July 31.

Ukraine is Russia’s major gas conduit to Europe. Currently the
Ukraine pipeline delivers 175 million cubic meters of gas daily
from Russia to neighboring European countries, which is about
half of Russia’s total gas supplies to the EU or 15 percent of
total EU natural gas consumption.